What is the All County franchisee's obligation regarding liens and encumbrances on the assets being purchased by All County?
All_County Franchise · 2025 FDDAnswer from 2025 FDD Document
- 23.6.1. Exercise of Option. Upon termination or expiration of this Agreement in accordance with its terms and conditions or your termination of this Agreement without cause, we have the option, exercisable by giving written notice to you within sixty (60) days from the date of such termination or expiration, to purchase the Business from you, including the leasehold rights to the Location, free and clear of all liens, restrictions or encumbrances. (The date on which we notify you whether or not we are exercising our option is referred to in this Agreement as the "Notification Date.") We have the unrestricted right to assign this option to purchase the Business. We will be entitled to all customary warranties and representations in connection with our asset purchase, including, without limitation, representations and warranties as to ownership and condition of and title to assets; liens and encumbrances on assets; validity of contracts and agreements; and liabilities affecting the assets, contingent or otherwise.
- 23.6.8. Escrow. If you cannot deliver clear title to all of the purchased assets, or if there are other unresolved issues, the closing of the sale will, at our election, be accomplished through an escrow arrangement with an independent escrow agent selected by us.
Source: Item 23 — Receipts (FDD pages 43–157)
What This Means (2025 FDD)
According to All County's 2025 Franchise Disclosure Document, if All County exercises its option to purchase the business from a franchisee upon termination or expiration of the franchise agreement, the franchisee must provide the business free and clear of all liens, restrictions, or encumbrances. This obligation extends to the leasehold rights to the business location. All County has the right to assign this purchase option to another party.
All County is entitled to customary warranties and representations related to the asset purchase. This includes assurances regarding the ownership, condition, and title of the assets, as well as the absence of liens and encumbrances. The representations also cover the validity of contracts and agreements and any liabilities affecting the assets.
If the franchisee cannot deliver clear title to all purchased assets, or if there are other unresolved issues, the closing of the sale will be managed through an escrow arrangement. All County will select an independent escrow agent to handle the closing process. This ensures a neutral third party manages the funds and asset transfer, protecting both parties' interests until all conditions are met.
This requirement protects All County from assuming any unexpected financial burdens or legal complications related to the purchased assets. Prospective franchisees should understand this obligation and ensure they maintain clear title to all assets throughout the term of their franchise agreement.